In this guide

What is Income Tax?

Income Tax can apply to employment income, self-employed profits, pensions, rental income, savings, dividends and other taxable income. The treatment depends on the type of income and the person’s circumstances.

How is Income Tax calculated?

The standard Personal Allowance is £12,570. For England, Wales and Northern Ireland, the basic rate is 20% on taxable income up to £37,700, the higher rate is 40% from £37,701 to £125,140 and the additional rate is 45% above £125,140. The Personal Allowance is reduced by £1 for every £2 of adjusted net income above £100,000 and is withdrawn at £125,140.

Scotland has different bands. Dividend income has a £500 allowance for 2026 to 2027, with rates of 10.75%, 35.75% and 39.35% above the allowance.

PAYE or Self Assessment?

Employment income is commonly collected through PAYE. Self Assessment may be required for self-employed income, rental income, higher income or other circumstances. For the 2025 to 2026 return, the online filing and balancing payment deadline is 31 January 2027. Payments on account are normally due on 31 January and 31 July.

Making Tax Digital for Income Tax

Making Tax Digital (MTD) for Income Tax is being introduced in stages. Whether you need to use it depends on your qualifying income: gross turnover from self-employment and property before expenses, based on an earlier Self Assessment return. The current start dates are:

  • More than £50,000 on your 2024 to 2025 return: from 6 April 2026.
  • More than £30,000 on your 2025 to 2026 return: from 6 April 2027.
  • More than £20,000 on your 2026 to 2027 return: from 6 April 2028.

MTD uses compatible software for digital records and quarterly updates. You still submit a Self Assessment return for the tax year before you start MTD. Exemptions and personal circumstances can affect the result, so check HMRC’s guidance and eligibility checker.

Individual responsibilities

  • Keep records of income and allowable expenses.
  • Check tax codes and payslips.
  • Register for Self Assessment when required.
  • Submit returns and payments by the applicable deadlines.
  • Keep evidence for claims and reliefs.

Official sources

Rates and deadlines can change. Use these links to check a rate, deadline or eligibility rule.

Need help with Income Tax?

We can discuss Self Assessment, tax records and the reporting requirements that apply to your circumstances.

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